BoU board wants law amended

Kampala, Uganda | THE INDEPENDENT | The Board of Directors of Bank of Uganda (BoU) has blamed the difficulties faced by the Central Bank on gaps in the Constitution.

Article 161 (2) of the Constitution vests the authority of the Central Bank on the Board. According to the law, the Chairperson of the Board is the Governor while the Vice Chairperson is the Deputy Governor.

The directors of the Central Bank however, said that there is need to separate the role of the board Chairperson from that of management.

The proposal was made while the Board together with the Minister of Finance, Planning and Economic Development, Hon Matia Kasaija, the Governor BoU and other officials appeared before the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on Friday, 08 January 2019.

One of the Board members, Polycarp Kahooza warned that unless the roles are separated, BoU will continue having difficulties.

“Once you have a Chairman of the Board who is also the Executive Director, administration can be difficult. Right now, there are very many difficulties in BoU which stem from such gaps, “ Kahooza said.

He recommended that government borrows a leaf from the Central Bank of Kenya.

“In Kenya, the Governor deals purely with technical matters like management of monetary policy, but general administration is done by the chairman of the board who is not the head of the institution,” said Kahooza.

When asked by the MPs if the Board was aware of the process of closing banks, Kahooza confirmed that  the Board was aware. He however, said that the board delegated the role of taking over of the banks to management.

“The board cannot have a meeting to discuss how to take over a bank. These are dangerous businesses that is why the board has to delegate taking over of banks,” said Kahooza.

Board member, Josephine Ossiya advised that whilst consideration is made to amend the Constitution to separate the role of the Governor from board chairperson, an immediate intervention should be made.

She suggested that guidelines should be made which clearly state the decisions that the Governor can make as Chief Executive Officer and those that he can take as chairman of the board.

“Now that we have gone through this process, maybe it is time to rethink and improve the operations and governance of the Central Bank. Indeed, we have seen the gaps and we need to address them,” said Ossiya.

MPs however, blamed the board for failing to perform and instead delegated its duties to the Governor.

Committee Chairperson, Abdul Katuntu  suggested that the power of the Board should be given to the Governor.

“Now that you said that is not possible for the board to do some functions and delegated to the Governor, can we take it away and give to the Governor such that you wash yourselves off this that you cannot do,” said Katuntu.

He also wondered if the Board was bothered by the fact that banks were closed and yet they (board members) did not have final reports.

“Does it bother you that you have not demanded for a single final report of closed banks and it takes Parliament 20 years later?” said Katuntu.

Michael Tusiime (NRM, Mbarara Municipality) said that the manner in which the board operated during the closure of the banks is questionable.

“If I was to appraise you, which parameters of performance would I hinge on. That you are comfortably seated on the board and there is an unresolved matter for the last 20 years,” wondered Tusiime.

Matia Kasaija said that it was unfortunate that BoU does not have final reports of all the closed banks. He said that it is a shortfall that must be addressed.

“There is a huge weakness and we shall demand officially in writing for these reports from BoU,” said Kasaija.

COSASE has been investigating the Auditor General’s report on the closure of seven commercial banks by Bank of Uganda.

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SOURCE: UGANDA PARLIAMENT